R&D Productivity at GSK? He CEDD, She CEDD

  
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Management endorsed GlaxoSmithKline's new R&D structure-the CEDDs-as an overwhelming success during the Big Pharma's December 2003 R&D day. But the analyst and investor communities weren't uniformly impressed. And fair enough: regardless of GSK's excitement and the storm of numbers and early stage results that promise a robust series of product launches, it's too early to judge the success of the CEDD experiment. A lot can go wrong between now and 2008, when the pipeline will ripen or rot.

Three years ago, after the merger of Glaxo Wellcome and SmithKline Beecham formed what was briefly the largest, and is now the second-largest, pharmaceutical company in the world [See Deal], GlaxoSmithKline PLC announced an innovative new R&D structure. An attempt to boost the company's inadequate R&D productivity, GSK's new structure created an industrial chimera: the body of a Big Pharma with the multiple heads of several independent biotech company-like Centers for Excellence in Drug Discovery (CEDD).

Management proclaimed that this brave experiment would result in increased productivity; GSK was so certain that it promised that within...

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